PM’s dept sets indigenous procurement targets, failure not an option

The Department of Defence has been asked to find 70 new contracts for indigenous-owned corporations by next year, while Education only has to find four.

The federal government has released its new Indigenous Procurement Policy, which takes effect from July 1, demanding 3% of contracts go to businesses that are majority-owned by Aboriginal and Torres Strait Islander people by 2020.

The policy document released by the Department of Prime Minister and Cabinet includes a list of the 2015-16 targets for each portfolio (see table below), and the formula for calculating them.

In total, the government wants 256 contracts going to indigenous-owned businesses in the coming financial year, 70 of those with the Department of Defence. The next highest targets are 19 contracts each for the Attorney-General’s portfolio, Treasury, and Immigration and Border Protection.

The whole-of-government 2015-16 target is 0.5% of the total spend, going up to 1.5% in 2016-17 followed by 0.5% increases in the following two years.

“I will be watching,” Scullion said at the lunch. “This is a KPI to secretaries. This is a KPI for department heads. If it’s something you fail in, we will note that failure, and movement up and down the political scale within the public service will no doubt take place.”

” … to stimulate Indigenous entrepreneurship and business development, providing Indigenous Australians with more opportunities to participate in the economy. As the Indigenous business sector is dominated by small to medium sized enterprises (SMEs), the new policy focuses effort on these enterprises to drive improvements in Indigenous economic development and Indigenous employment.”

In a joint statement attached to the new policy, Scullion and Finance Minister Mathias Cormann repeat the government’s belief that: “Indigenous businesses are around 100 times more likely to employ an indigenous person than other businesses.”

The indigenous procurement targets for each portfolio:

Portfolio

Average number of contracts over previous 3 financial years

2015-16 Target for indigenous-owned businesses

Education

711

4

Veterans’ Affairs

827

4

Parliamentary Departments

843

4

Communications

933

5

Agriculture

1,037

5

PM&C

1,255

6

Social Services

1,281

6

Employment

1,474

7

Infrastructure and Regional Development

1,597

8

Finance

1,616

8

Health

2,440

12

Foreign Affairs and Trade

2,595

13

Environment

2,804

14

Industry and Science

2,987

15

Human Services

3,521

18

Immigration and Border Protection

3,715

19

Treasury

3,806

19

Attorney-General’s

3,817

19

Defence

14,005

70

Total

51,264

256

The procurement rules also favour small-to-medium enterprises — the target for SMEs being 10% — and those that support people with disabilities, but independent senators Nick Xenaphon and John Madigan and others believe Australian companies should get similar preferential treatment though another change in the rules.

“The Commonwealth Procurement Rules are not intended to target specific categories of goods or services, nor specific industries. … The government cannot support the committee’s recommendations to implement initiatives that preference local suppliers when procuring goods and services above the procurement thresholds ($80,000 for general good and services and $7.5 million for construction services). Any recommendation to treat suppliers inequitably through schemes that preference local suppliers, beyond those that are specifically included in the 17 exemptions listed at Appendix A of the CPRs, would be inconsistent with Australia’s international obligations.”

According to a speech Xenaphon made in the Senate, our allegiance to free trade principles led one “Scandinavian official” to describe Australia as “the free trade Taliban” due to a “fundamentalist, literalist and purist approach to free trade” that the South Australian Senator said was shared by no other country.

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